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Jobs, unemployment and government action

The world economy is still suffering from the strains of the longest crisis of modern times, and nowhere is this more evident than in the high unemployment numbers. Over 100 million people are out of work in the G20 countries, with joblessness at historically high levels in several of them. Long-term and youth unemployment, and low female participation, pose particular challenges.

Even in countries where recovery has begun to take hold, the reduction in joblessness has been frustratingly slow, and all too often achieved via low-skill, low-paying jobs. Resilient, inclusive and smart societies need more.

Policymakers have a key role to play in introducing the reforms and measures needed to improve labour markets and bring unemployment back down. In this OECD Observer Roundtable, we asked a cross-section of ministers:

“What actions are you taking to create more and better jobs in your economy?”

©OECD Observer Roundtable No 12.

Australia: Creating an environment for new jobs

Germany: A multidimensional strategy

Korea: Towards a 70% employment rate

Spain: Delivering clear results

United States: Creating broadly shared prosperity

Australia

Creating an environment for new jobs

©Australian Government

Eric Abetz, Australian Minister for Employment, and Chair of the 2014 G20 Labour and Employment Ministerial Meeting

Priorities for Australia, like many other countries, centre on supporting sustained economic growth and improving labour market conditions, recognising that it is businesses which create jobs, not government. The Australian government has been working with our G20 partners to lead international action on these issues, and is implementing policies which aim to increase Australia’s growth potential and create an economic environment where 2 million new jobs can be generated over the next ten years.

In recognition of the private sector’s central role in driving growth, the government’s economic strategy is focused on improving opportunities for businesses, including by strengthening their ability to compete internationally. Our priorities include undertaking fiscal consolidation at a measured pace, redirecting government spending to quality infrastructure investment, and implementing reforms which foster innovation and entrepreneurship.

The government is also working to reduce tax and regulatory burdens on business. This includes cutting red and green tape, abolishing inefficient taxes (such as the carbon and mining taxes) and reducing the company tax rate. We are also improving the operation of Australia’s workplace laws through reforms to restore balance in the workplace relations system.

As part of its strategy to address growth in unemployment, the government is improving the performance of Australia’s employment services system. Australia’s market-driven public employment services are being restructured to deliver better outcomes for jobseekers and have a greater
focus on the principle of mutual obligation. Changes to the services system will strengthen the incentives for providers to deliver high quality assistance by refocusing payments on employment outcomes, setting clear expectations for jobseekers and improving the support available to employers. Young people are also being provided with stronger incentives to enter employment or education.

Like many countries, Australia is facing demographic challenges. To limit the impact of population ageing and support economic growth, the government is encouraging more people to participate in the workforce. Our strategies include gradually extending the Age Pension age and adjusting eligibility conditions for the Disability Support Pension and family payments. In addition, the government is committed to implementing a new paid parental leave scheme, which will encourage increased female participation.

To improve productivity, the Australian government is also taking steps to encourage skills development. Our strategy has a focus on meeting employers’ skill needs, and includes further deregulation of the university system and additional support for vocational education.

These reforms will provide long-term benefits for Australians and demonstrate the government’s commitment to delivering on the outcomes of Australia’s G20 presidency.

Further information on the G20’s outcomes for 2014 is available at www.g20.org



Germany

A multidimensional strategy

©Federal Government of
Germany/BMAS/Knoll

Andrea Nahles, Federal Minister of Labour and Social Affairs

Creating more jobs in sectors such as high technology does not suffice. More jobs are not just a matter of quantity, but quality, too. And more jobs have to be absorbed by the labour market and the workforce. In Germany we are therefore pursuing a multidimensional approach that is reflected within our G20 Employment Plan and Growth Strategy.

We are focusing on individually and effectively activating employment policies and labour market institutions that help improve the supply side and the demand side, and better match skills with labour market needs.

We proactively engage in effective social dialogue, which is indispensable for social cohesion and sustainable economic growth.

We continue to strengthen our automatic stabilisers, such as our social security systems. Most recently, we have adopted a new pension reform package that better takes into account long-term contributions
to pension schemes and better rewards time
spent raising children. In addition to that, the reform improves social security for those on disability pensions and provides additional funds for rehabilitation measures.

We are focusing on fair remuneration, such as with the first-ever legal minimum wage, which was recently adopted in Germany, and provides a decent salary that cannot be undercut to almost 4 million workers in the low-income sector. With our Joint German Occupational Safety and Health (OSH) Strategy, we aim to reduce job-related illnesses and enhance the psychological health of workers.

As companies create jobs, we have to constantly facilitate their access to credit and boost entrepreneurship, particularly for start-ups.

Against the background of the demographic change, we are implementing a skilled labour concept to help prepare the long-term unemployed for their reintegration into the labour market through individual consultancy and coaching programmes. And we are promoting the labour participation of women beyond part-time work, by providing better childcare facilities and innovative working time arrangements to help them balance work and family life.

Finally, we are improving the prerequisites for our successful dual system of apprenticeships by strengthening the school-to-work transition, particularly for young people with learning difficulties, through targeted, individually tailored mentoring programmes.


Visit www.bmas.de



Korea

Towards a 70% employment rate

©MOEL Korea

Lee Ki-kweon, Minister for Employment and Labour, Korea

The Korean government has set the employment rate, rather than the growth rate, as a top priority of the national agenda in order to meet public expectations for “happiness through work.” This shows that the government has embarked on a paradigm shift under which all policies are reviewed from the perspective of job creation. To this end, the Roadmap to achieve a 70% Employment Rate was introduced in June 2013. It is a strategic plan for job creation that sets the ambitious goal of increasing the employment rate to 70% by 2017.

A salient feature of the employment roadmap is to create more jobs by promoting the creative economy and reducing working hours. The Korean government also strives to create high-quality part-time jobs and promote Korean apprenticeship training programmes in order to enhance the employability of the economically inactive population, especially young people and women.


Improving the quality of jobs is as important as creating jobs. We are implementing policy measures to make working conditions better for non-regular workers and to narrow the gap between employees of main contractors and subcontractors.

As a result, in quantitative terms, the employment rate has reached a record high of 65.2% (annual average between January and August). The quality of employment has also improved, with a growth of new regular employees.

Considering the rapid ageing of the population and the changing industry structure, reaching an  employment rate of 70% will be essential to ensuring sustainable growth and welfare. In order to achieve the goal, the Tripartite Jobs Pact among labour, management and the government was signed in 2013. On the basis of such social dialogue, the Korean government will make continued efforts to create more and better jobs.


Visit http://m.moel.go.kr/EngNewsList


Spain

Delivering clear results

©Government of Spain

Fátima Báñez, Minister of Employment and Social Security

Spain has introduced a profound and comprehensive set of measures since 2012 in order to improve its labour market regulation and employment policies. These measures are starting to deliver clear results. In the second quarter of 2014, employment showed year-on-year growth for the first time after 23 consecutive quarters of job destruction. More than 400,000 jobs were created in Spain between April and June 2014. Most importantly, Spain is creating employment while GDP is growing at just 1% a year.

The 2012 labour reform has been the cornerstone for the transformation of the Spanish job market. Based on the “flexicurity” model, the reform transformed collective bargaining to bring it closer to ground, rationalised employment protection legislation and bet on internal flexibility to avoid dismissals. It also introduced temporary measures to foster permanent contracts, such as a one-year probationary contract for small and medium-sized enterprises linked to generous hiring subsidies or, more recently, a social security flat tax rate of €100 for new permanent contracts. Both are helping to fight duality in the labour market.

The modernisation of active labour market policies must complement the development of a new legal framework. Spain is now focusing on building a new institutional architecture to better co-ordinate and programme regional actions, in a new result-oriented approach that conditions funding to the regions on results measured by a set of indicators. A best practice sharing programme has also been developed, as well as new activation tools, such as a national website with vacancies that merge public and private opportunities in a single portal. We are counting on the private sector and on new technological tools, such as social media networks, to bring such mediation to a new level.

Furthermore, we are focusing on giving more opportunities to young people through the European Youth Guarantee and the National Strategy for Entrepreneurship and Youth Employment, which includes over 100 measures. Training is also fundamental in our long-term strategy to give real opportunities to the unemployed and tackle skills mismatch. We believe that creating quality employment is the best social policy.

Visit www.empleo.gob.es


United States

Creating broadly shared prosperity

©US government service

Thomas E. Perez, US Secretary of Labor

The US economy, having emerged from the depths of the Great Recession, is in the middle of a robust recovery. September was the 55th consecutive month of private-sector job growth, with the unemployment rate falling to its lowest level since July 2008. With new investments in energy and education, by reforming our health care system, reducing our deficit and more, we have laid a foundation for future growth.

But we have to do more. We want to raise our national minimum wage, which is one of the lowest among OECD countries as a percentage of median wage. By fixing our broken immigration system, we could add $1.4 trillion (€1.1 trillion) in GDP over the next two decades. And by upgrading our infrastructure, we can create good jobs while facilitating the flow of commerce domestically and internationally. All of this requires legislative action, and we are hopeful the US Congress will work with the Obama administration on these initiatives that will accelerate the pace of growth.

Paid family leave is one issue where we can and must do more (see video). When I represented the US government at the G20 Labour and Employment Ministerial in September, it opened my eyes to how far behind the rest of the world we lag on this issue. Helping more people balance the job they need with the family they love is not just the right thing to do; there’s also a profound economic impact.

Labour force participation in the US has been declining, including among women. Paid family leave would help more women return to work. Indeed, if so-called prime-age women (ages 25-54) in the US participated in the labour force at the same rate they do in Canada, it would increase GDP by 3.5%, and that would translate into $500 billion in additional economic activity.

We’'ve emerged from the worst economic crisis of our lifetimes, but I am eager to do even more to create broadly shared prosperity and an economy that works for everyone.

Visit www.dol.gov

© OECD Observer No 300, Q3 2014

Useful links

OECD Observer roundtables

www.oecd.org/g20

G20 Brisbane 2014

Australia: Brisbane 2014 special